Innovative Solutions and Support(ISSC) - 2025 Q2 - Quarterly Results

Innovative Solutions & Support Second Quarter 2025 Results Second Quarter 2025 Highlights & Management Commentary The company reported strong Q2 2025 results with significant growth in revenue and EBITDA, driven by key product lines and strategic initiatives Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Change YoY | | :--- | :--- | :--- | | Net Revenue | $21.9 million | +104% | | Gross Profit | $11.3 million | +102% | | Gross Margin | 51.4% | -60 bps | | Net Income | $5.3 million | +340% | | Diluted EPS | $0.30 | +329% | | Adjusted EBITDA | $7.7 million | +219% | - The strong performance was driven by contributions from the F-16 product line and the air transport market[2] - The company is on track to achieve its full-year target of growing both revenue and EBITDA by more than 30%[2] - Key strategic initiatives progressed during the quarter, including the Exton facility expansion to triple capacity, integration of acquired Honeywell products, and implementation of a new NetSuite ERP system[2] Second Quarter 2025 Financial Performance Revenue surged 104% to $21.9 million, driven by new programs and acquisitions, while operating leverage improved significantly - Revenue growth was driven by new military programs, the acquired Honeywell military product line, and growth in the air transport market, including an acceleration of some sales[4] Gross Profit and Margin Comparison (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross Profit | $11.3 million | $5.6 million | | Gross Margin | 51.4% | 52.0% | - Operating expenses as a percentage of revenue fell to 19.6% from 36.7% in the prior-year quarter, highlighting significant operating leverage as the business scales[6] Net Income and EPS Comparison (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $5.3 million | $1.2 million | | Diluted EPS | $0.30 | $0.07 | - New orders in Q2 2025 were $20.8 million, and the backlog as of March 31, 2025, was $79.6 million, excluding additional orders from long-term OEM programs[8] Balance Sheet, Liquidity and Free Cash Flow The company maintained a net debt position of $26.2 million with total liquidity of $8.8 million, while free cash flow decreased due to facility expansion investments Liquidity Position as of March 31, 2025 | Metric | Amount | | :--- | :--- | | Long-Term Debt | $27.4 million | | Cash and Cash Equivalents | $1.2 million | | Net Debt | $26.2 million | | Total Cash & Credit Availability | ~$8.8 million | Cash Flow Summary (Six Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Cash Flow from Operations | $3.1 million | $4.4 million | | Capital Expenditures | $1.8 million | $0.3 million | | Free Cash Flow | $1.3 million | $4.1 million | Conference Call Information A conference call to discuss second quarter results is scheduled for May 15, 2025, with webcast and replay details available - A conference call to discuss Q2 2025 results is scheduled for 9:00 AM ET on Thursday, May 15, 2025[11] Conference Call Dial-In and Replay Information | Type | Number | Passcode | | :--- | :--- | :--- | | Domestic Live | (844) 739-3798 | N/A | | International Live | (412) 317-5714 | N/A | | Domestic Replay | (844) 512-2921 | 10199274 | | International Replay | (412) 317-6671 | 10199274 | Financial Statements The statements detail the company's financial position and performance, including balance sheets, operations, and non-GAAP reconciliations Condensed Consolidated Balance Sheets Total assets grew to $89.9 million, driven by increases in inventories and accounts receivable, while shareholders' equity rose to $53.5 million Balance Sheet Summary (in millions) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $41.5 | $34.7 | | Total Assets | $89.9 | $82.4 | | Total Current Liabilities | $8.5 | $7.3 | | Long-Term Debt | $27.4 | $28.0 | | Total Liabilities | $36.4 | $35.7 | | Total Shareholders' Equity | $53.5 | $46.6 | Condensed Consolidated Statements of Operations Net sales more than doubled to $21.9 million, leading to a significant increase in net income to $5.3 million for the quarter Income Statement Summary - Three Months Ended March 31 (in millions) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Net Sales | $21.9 | $10.7 | | Gross Profit | $11.3 | $5.6 | | Operating Income | $7.0 | $1.6 | | Net Income | $5.3 | $1.2 | | Diluted EPS | $0.30 | $0.07 | Reconciliation of Non-GAAP Measures The company reconciled GAAP net income to non-GAAP measures, reporting an Adjusted EBITDA of $7.7 million and a net debt leverage ratio of 1.4x Reconciliation of Net Income to Adjusted EBITDA - Q2 2025 | Metric | Amount (in millions) | | :--- | :--- | | Net Income | $5.3 | | Adjustments (Taxes, Interest, D&A, etc.) | $2.3 | | EBITDA | $7.6 | | Other Adjustments | $0.1 | | Adjusted EBITDA | $7.7 | Net Debt Leverage | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net Debt | $26.2 million | $10.1 million | | Leverage Ratio | 1.4x | 0.8x |